Ron Burkle may be best known as a supermarket magnate, but the Beverly Hills billionaire is now making moves that’ll likely earn him another label: hotelier.
In his first major investment in L.A.’s hotel market, Burkle purchased Koreatown’s Wilshire Hotel through a joint venture between his L.A. investment firm, Yucaipa Cos., and New York hotel developer and operator Sydell Group. The venture was formed earlier this summer with the goal of spending up to $1 billion to acquire and develop hotels.
The Wilshire, which sought bankruptcy protection earlier this year amid a tax dispute with the city of Los Angeles, is a 12-story, 385-room midprice hotel on Wilshire Boulevard near Normandie Avenue. It was purchased for $35 million in an all-cash deal that closed last month, according to a Sept. 1 bankruptcy filing by the previous owner, Majestic Towers Inc.
Burkle has been stepping up his investments in the hotel sector as the industry recovers from the recession, said Lloyd Greif, chief executive at downtown L.A. investment banking firm Greif & Co. and a longtime friend and adviser to Burkle.
“He made a lot of money in the supermarket space, and there’s not a lot of boutique plays in the space anymore,” Greif said. “At this point, he’s got a lot of money to invest and that’s why you see him branching out into the other industries and he’s leveraging his expertise in real estate.”
Burkle, who ranked No. 5 on the Business Journal’s list of Wealthiest Angelenos in May with a net worth of $4.3 billion, checked in to the hotel industry two years ago when an affiliate of Yucaipa invested $75 million in New York hotel developer and operator Morgans Hotel Group. More recently, Burkle raised his profile in the space by taking a seat on Morgans’ board and increasing Yucaipa’s stake in the company.
Until a few years ago, he was best known for leveraged buyouts of grocery stores. But in recent years, Burkle has acquired stakes in such companies as bookstore chain Barnes & Noble and struggling downtown L.A. apparel maker and retailer American Apparel Inc.
Even though Burkle has expanded his holdings, he hasn’t changed his strategy of investing in distressed assets, Greif said.
“The one thing that ties it together is opportunistic investing,” he said. “You are looking at a difficult economy when hospitality and leisure has been hit hard. If you’ve got liquidity and deal smarts, it creates opportunity for some attractive investments.”
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